Stock Market & Financial Investment News

Railroad operator estimates lowered at StephensStephens lowered its estimates for several rail operators ahead of their Q1 earnings reports citing the severe winter weather, but thinks the potential impact of weather on the quarter is well known. The firm said it would use post-earnings weakness in Genesee & Wyoming (GWR), CSX (CSX) or Norfolk Southern (NSC) as a buying opportunity, as it believes underlying demand is strengthening and the fundamental outlook for the group is unchanged. Stephens has Overweight ratings on the three stocks mentioned above.

CSX upgraded at BMO CapitalAs reported previously, BMO Capital upgraded CSX to Outperform from Market Perform. After meeting with the company's management, the firm thinks it has a significant cost reduction opportunity; an improving pricing environment; and robust demand in the merchandise and intermodal segments. The firm believes that the coal headwind only presents a moderate risk to the company. Target to $40 from $38.

Genesee & Wyoming sees Freightliner to generate US$785M in revenue in first yearDuring its first year of ownership, G&W expects Freightliner to generate approximately US$785M in revenues at current exchange rates and US$93M of EBITDA , which includes annual operating lease expense of US$69M. G&W expects the acquired business to require annual average capital expenditures of approximately US$26M and to have depreciation and amortization expense of approximately US$28M. On a blended basis, income from Freightliner carries a weighted average book tax rate of 22%. G&W expects annualized EPS accretion from the acquisition of approximately 8%, subject to finalization of acquisition accounting under U.S. GAAP.

Canada introduces legislation to enhance crude-by-rail safety, accountability The Honourable Lisa Raitt, Minister of Transport, introduced legislation in the House of Commons that will enhance railway safety and make the rail industry and crude oil shippers more accountable to Canadians. The new Safe and Accountable Rail Act proposes amendments to the Canada Transportation Act and Railway Safety Act. Changes include a new liability and compensation regime for federally regulated railways, including minimum insurance requirements; a compensation fund financed by levies on crude oil shippers; increased information-sharing provisions; and stronger oversight powers for the Minister and Transport Canada inspectors. The new liability and compensation regime will be consistent with those the Government has introduced for other modes of transport, such as marine tankers and oil pipelines. It is based on the “polluter pays” principle and makes railways and shippers responsible for the cost of accidents, protecting taxpayers and communities by ensuring that adequate resources are available for compensation if an accident were to occur. Proposed amendments to the Railway Safety Act will broaden the powers of the Minister and inspectors to order railway companies and others to take specified measures or stop any activity deemed necessary for safe railway operations. The proposed amendments will also create new regulation- making powers requiring railway companies to share information with municipalities. These changes are part of the Government’s commitment to strengthen oversight and increase collaboration between communities and the rail industry, addressing issues raised in the Transportation Safety Board’s final report on the Lac-Mégantic derailment as well as concerns of the Federation of Canadian Municipalities. Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Genesee & Wyoming (GWR), Kansas City Southern (KSU), Norfolk Southern (NSC) and Union Pacific (UNP). Reference Link

CSX confirms response to West Virginia train derailmentCSX announced that teams were working with first responders on the derailment of an oil train near Mount Carbon, West Virginia. The train consisted of two locomotives and 109 rail cars and was traveling from North Dakota to Yorktown, Va. One person was being treated for potential inhalation, but no other injuries were reported. "At least one rail car appears to have ruptured and caught fire. The derailment has resulted in the precautionary evacuation of nearby communities, and precautionary suspension of operations at the Cedar Grove and Montgomery water treatment plants. CSX is working with the Red Cross and other relief organizations to address residents’ needs, taking into account winter storm conditions. These efforts include shelters for residents who have been evacuated. CSX teams also are working with first responders to address the fire, to determine how many rail cars derailed, and to deploy environmental protective measures and monitoring on land, air and in the nearby Kanawha River. The company also is working with public officials and investigative agencies to address their needs," the company said.